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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session


Posted: June 16, 2021 09:33 AM
From: Senator Timothy P. Kearney
To: All Senate members
Subject: EITC/OSTC Improvement and Accountability
I plan to introduce legislation to bring greater transparency and accountability to the Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs in order to cut waste and expand scholarship funding for Pennsylvania students.

The Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs allow corporations to divert their state taxes to private and parochial schools or organizations to fund scholarships and tuition. Despite taxpayers subsidizing the EITC program, the Department of Community and Economic Development, which administers the program, is prohibited by law from requesting information from applicants other than what is expressly outlined in statute. 
This creates a lack of accountability and transparency with these programs. Because of loopholes in the law, the commonwealth and public do not have household income data about the families that get the scholarships, if the students are from low-income families and how the students perform academically.

This legislation requires the schools and scholarship organizations to be more accountable to students, families and taxpayers. Currently, the organizations can keep 20% of each dollar that passes through them for administrative costs, which is higher than other tax credit programs or allowed by non-profit organizations designated as public charities. Organizations can also charge an application fee to eligible students applying for a scholarship. This proposal prohibits that practice.

The bill lowers the set-aside to 5% for scholarship organizations participating in the EITC and OSTC programs, which is similar is other organizations and more reasonable. This will provide up to an additional $36 million in scholarships for students without an increase in any taxpayer aid. This means less taxpayer money is used for the benefit of private organizations and more funding is provided to students in need as is the purpose of this program.

Scholarship organizations will be required to report more information on the students and families that receive scholarships and their educational outcomes, assuring taxpayers that their tax dollars are directed to students with the greatest need and that participating students receive a high-quality education.

The bill would allow DCED to track the academic successes of students on EITC/OSTC scholarship to ensure the tuition assistance they are receiving through the programs is having a positive impact on their academics. It also allows DCED the authority to add any additional reporting requirements as the program moves forward into future years. This is consistent with other tax credit programs where the agency can add reporting requirements at any time.

Please join me in cutting government waste and expanding educational opportunity in our state.

Introduced as SB72